Oh, absolutely business owners. If you run a small business, you are interacting with a customer on some level, and that means protecting yourself with insurance.
Although the cost varies by type of transaction, the benefits of business insurance far outweigh the cost. And liability insurance helps you protect your business. There are many types of business insurance, which makes liability insurance a basic necessity for small business owners.
Let’s see how professional and general liability insurance coverage protects you.
What is small business liability insurance?
There are two basic types of liability insurance, professional liability insurance and general liability insurance. Business owners may need one or both types:
- General liability insurance – General liability insurance is the most common business insurance coverage. General liability coverage protects your business if a customer or visitor is injured on your business site. General liability insurance also provides protection against damage you cause while doing business. For example, you are a contractor and you break a client’s window when you are mounting the extension ladder. General liability insurance will also protect your business from claims for reputational damage (someone claims defamation or slander) and advertising injuries (someone is harmed by your product claims).
- Professional responsibility – Professional liability coverage is commonly referred to as error and omission insurance. Protects against errors in the service provided. For example, you are a financial planner and an investor’s portfolio goes south. Or you’re a couple counseling therapist and someone thinks you’ve given bad advice.
Which companies need liability insurance?
You may need general liability insurance and professional liability insurance.
You need general liability insurance to run a business. Without general liability coverage, you are leaving it open to lawsuits regarding your products and you are not covered by property damage that causes or accidents that happen to a visitor to your business. If a seller or visitor has a slip / fall injury to your business site, you have no coverage.
You may need both types of business insurance if you provide professional services. Here’s an example: You’re an accountant. One of your tax return customers slips on a damp floor of your office bathroom, breaking an ACL. This is where general liability insurance comes into play.
Advise a tax return customer, recommending a different way to manage your computer’s amortization to reduce taxes. Two years later, the client has news from the IRS. Your advice was incorrect and the client owes overdue taxes. This is where professional liability coverage would provide coverage.
What does general liability insurance cover?
Here’s a more specific breakdown of what small business owners need to know about general liability insurance coverage.
General liability insurance policies cover you if a visitor or customer suffers a personal injury at your business site. The person’s bills for medical treatment could be astronomical, and the client’s injuries could involve medical bills plus court costs and attorney’s fees, an obvious reason to have general liability insurance.
If you go to customers’ properties for work, your general liability policy will cover you if you cause property damage. For example, you are a landscaper and cause damage to property in a building when a rock falls from a mower or you run over a row of hydrangeas. In any case, you have damaged a person’s property while performing services and are legally liable.
Legal defense costs
One of the highest payments an insurance company pays for general liability claims is not for bodily injury, but for the cost of legal fees. For example, a bathroom slip / fall injury to a client’s ACL causes stress and loss of income. In addition to requesting payment of medical expenses, the client demands additional money. Your general liability policy would cover legal defense costs, including legal fees and related costs.
Personal and advertising damage
General liability insurance covers you if someone claims that your product was promoted by fake advertising. For example, you sell a mattress that is “guaranteed to reduce back pain” and someone says it didn’t work.
Personal injury claims come from someone who thinks you have defamed or defamed their business. For example, you are operating a food truck and one of your employees tells a customer that someone else’s food truck business does not maintain cleanliness standards.
What does professional liability insurance cover?
Errors and omissions
This is comprehensive coverage and protects you from a general liability claim for negligence, misrepresentation, or breach of good faith.
As you can imagine, these are general terms and claims usually involve legal costs. Your insurance company will cover your defense costs, including legal fees, the amount of an agreement / lawsuit (up to what is stated in the policy), and administrative costs (such as the preparation of documentation). .
What is not covered by corporate liability insurance?
Now that you know what’s covered, you need to know what’s not covered with this type of small business insurance:
- Commercial property insurance – Your general liability covers you if you damage another person’s property, but to protect your commercial property you need a commercial property, which protects your building and commercial equipment. You may need commercial property insurance even if you operate from home, unless you can get a “contractor” from your homeowner’s policy to cover your business. You need commercial property even for premises rented by you.
- Commercial car insurance – Yes, you need an independent commercial car policy to cover a vehicle or vehicles that you use to conduct business.
- Workers’ compensation – If you have employees, you need a separate employee compensation policy. In this age of subcontractors, many small business owners choose to buy workers’ compensation policies that cover part-time and / or temporary workers, even 1099.
- Cyber security – Many insurance companies choose to add this to their liability coverage or offer it as an independent policy. For example, you may be able to obtain a business owner policy that includes general and / or professional liability coverage, as well as cybersecurity. Cybersecurity is necessary for all normal business operations where customers’ personal data is required as part of doing business. It is one of the most overlooked and needed small business insurance products.
Cost of general liability insurance for small businesses
How much is general liability? The cost of the insurance policy varies depending on the specific business and the amount of income of the company. It may also vary depending on your chosen coverage limits. Choosing an insurance company that offers umbrella coverage, such as a business owner policy, will reduce your overall liability insurance cost.
In general, you can expect to pay as little as $ 29 a month for basic business liability insurance coverage.
Cost of professional liability insurance for small businesses
Rates vary from insurance company to insurance company. Professional liability insurance varies by business type and annual income.
Generally, you can expect to pay as little as $ 20 a month for basic coverage limits.
How To Choose The Right Liability Insurance For Your Small Business
Before you get general liability insurance or professional liability insurance, talk to a legal professional about setting up your business as a limited liability company. By forming an LLC, you can obtain financial protection by separating your business assets from your personal assets.
Here are some tips for the small business owner:
- Network with other small business owners
- Buy online. With just a few clicks, you can start searching for quotes.
- Buy in person.
- Get a general liability insurance quote and a professional liability quote if needed, and compare.
- Carefully consider the deductible. With any claim, your rates will increase. Is it better to have a higher deductible, with the intention of paying damages and not making a claim? How much can you afford to pay out of pocket?
- Evaluate your quotes.
- As a final deciding factor, call the customer service line that you use to make a claim. See if you can tolerate the timeout.
The best general liability insurance for small businesses
Every employer needs general liability insurance. Many also need professional liability insurance.
We have chosen companies that offer both. These companies also offer a business policy or BOP, which can help you save money by combining policies under one umbrella.
These companies also offer cyber insurance and other insurance products. For example, Progressive offers commercial car insurance.
The Hartford offers a variety of additional insurance products and can also offer financial advice.
State Farm offers motorist policies to homeowners for many home businesses. If you set up your home business, you can save money by buying a broker instead of a separate policy.
NextInsurance is the solution for contractors and landscapers who want to establish a quick policy. NextInsurance also offers policies for daily, weekly, or monthly time periods.
Biberk Insurance is a favorite of subcontractors working on third party locations. Biberk offers many insurance policy options.
Progressive is known as a car insurance company, but offers many types of business insurance. Because it offers both a general liability insurance policy and a commercial car insurance policy, you may be able to save money by using the same carrier to get both types of insurance.
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